Healthcare Spending Slowdown May Persist

SUSTAINED SLOWDOWN MAJOR IMPACT ON US ECONOMY

EDITOR’S NOTE: Economists generally agree that the recession hampered health care spending in direct and indirect ways, and due to loss of jobs, loss of wealth or loss of health insurance, many people were less likely to use health services, especially those deemed discretionary, contributing to a slowing in volume and spending growth. Medicare cuts were initiated as part of the Patient Protection and Affordable Care Act(PPACA), and many state governments were forced to cut Medicaid reimbursement rates in the recession, contributing to a slowing in reimbursement rates for public programs. Also many small businesses were forced to drop coverage as the recession continued, and millions of Americans lost jobs and health coverage in both large and small businesses, causing the uninsured to surge to 50 million at the recession’s peak.

However, according to conclusions of two national studies published Monday in the journal Health Affairs, one by Harvard Medical School researchers and one by Harvard health economists, and reported on by Kaiser Health News in the article excerpted below, the roll back in healthcare spending over the past three years may be the result of more than just the recession, and is likely to persist over time.

The distinct studies, which come to slightly different conclusions, point to structural changes in healthcare delivery, benefit design changes and more patient cost sharing, and more efficient models of care as responsible for a significant part of the slowdown in spending growth.

The term “cautious optimism” is used by the medical school researchers in reference to the possibility of a sustained healthcare spending slowdown, and both studies conclude that sustained lower levels of spending would have a major impact on the US economy and on government and household finances.

KAISER HEALTH NEWS–Two new studies assert that the country’s unusual slowdown in health spending growth rates may be due more to structural changes in the health care system than to the lagging economy, and thus could continue even after business picks up.

National health spending grew by 3.9 percent a year between 2009 and 2011, the lowest rate of increase in half a century. There has been a vigorous debate about whetherthis slowdown portends a new era of lesser health care inflation or is merely a brief dip caused by the recession. The new studies, published Monday by the journal Health Affairs, are optimistic that the change is permanent, though neither study can pinpoint what factors exactly are responsible.